Otago town Lawrence may only have enough drinking water for the next month

An Otago town may only have enough drinking water for the next month.

The Phoenix Dam, which holds the town's water supply, is so old it's no longer safe and is being decommissioned.

A new $20 million replacement is still six months off completion.

Built in the 1860's, Phoenix Dam was traditionally used for goldmine sluicing.

Not only has it been the main source of drinking water for Lawrence ever since, but it's also been a part of the community's DNA for recreation purposes, swimming, fishing and canoeing - until now.                               

Engineering reports say the dam's age makes it unsafe, giving landowner Port Blakely no choice but to start draining it and eventually decommission it.

Local Councilor Jock Martin said it's outlived its purpose.

"It's also created a bit of anxiety amongst the community wondering what's going to go on."

Because the new $20 million water system won't be ready for another six months.

"It's been a very unfortunate chain of events with a record dry summer that we've experienced," Martin said.

If the dam collapsed, Lawrence could be inundated, but if it's drained now, Lawrence will have no water.

Port Blakely is cautiously keeping levels just high enough to avoid that.

A local resident said it's a worry.

"We're running out of water and that's a worry, we can supply bottled water for people but when it comes to doing washing and showering that's the worry," they said.

Port Blakely is helping iwi and Fish & Game to move a population of eels, some as old as 50, to a new habitat as their habitat is modified. 

Clutha District Council predicts the bottom 25 percent of the dam will be unusable.

It's applied for urgent consent to divert the stream above Phoenix Dam and form a bypass to ensure the supply of water will continue for Lawrence.

The town is on level three water restrictions and an unrelated boil water notice is also in place.

Clutha District Mayor Bryan Cadogan said: "We appreciate the patience that the community has shown I think they can see that the $20 million that has been spent will alleviate the problem long term it's just annoying we've fallen six months short of the cavalry coming over the hill."